Luxury apartments in Spain: a safe haven in times of economic uncertainty
Financial markets can be notoriously fickle, as global trends move money around the world according to the latest hot investment. However, luxury apartments in Spain, as well as other luxury real estate propositions, have remained a popular investment choice for both local and international investors. Despite other sectors suffering, investment in luxury apartments in Spain has remained remarkably buoyant. In fact, in recent years, the Spanish property market has proven to be a robust and reliable investment option, even during times of global economic uncertainty.
According to recent reports, the Spanish property market has remained resilient despite global movements tending downwards. Property prices were remarkably buoyant in 2022, and while it is still rather early to predict movements in 2023, the overall outlook for the luxury real estate market in Spain remains positive.
One of the main reasons why luxury real estate in Spain has proven to be a reliable investment is that it is relatively independent of market fluctuations. Unlike other types of real estate investments that are heavily dependent on buyers seeking mortgages, the luxury property market – particularly in areas with a high concentration of luxury apartments and villas such as the Costa del Sol – depends disproportionately on cash buyers who have the financial means to purchase without relying on a loan, or they use loans as financial instruments as and when markets are favourable.
Wide variety of luxury properties in Spain
When it comes to luxury apartments in Spain, there is a wide range of investment options available. From modern, sleek residences in bustling cities like Madrid and Barcelona, to lavish apartments set in exclusive complexes nestled in coastal areas such as Marbella on the Costa del Sol, there is a property for every taste. In addition, Spain’s relaxed lifestyle, vibrant culture, and temperate climate make it an ideal destination for international buyers seeking a second home or a holiday property.
Apart from its relative stability, Spain’s luxury real estate market offers several other benefits, such as:
- Tax-friendly policies both locally and nationally
- Reliable legal system
- High-quality construction standards
- As Spain is a member of the European Union, investors can benefit from the freedom of movement and economic stability offered by the EU.
Indeed, many investors from outside the EU have taken advantage of the ‘Golden Visa’ scheme offered by the government to gain residence in Spain and in doing so also obtain access to the rest of the European community.
Foreign investment in Spanish real estate has been steadily increasing again following the global crash of 2008, with British investors being the largest group. Indeed, property investment experts were taken a little by surprise as the pent-up demand created by the Covid pandemic saw Spain experiencing the highest level of residential real estate sales since 2008, while 2022 also exceeded expectations.
For those seeking mortgages, it’s an attractive place to buy property, with low interest rates making it simpler and less expensive for investors to secure finance for property purchases as and where required. The coastal regions of the Costa del Sol and Costa Blanca are reliably in high demand, with Marbella offering a wide range of investment opportunities, including luxury apartments, townhouses, and spectacular luxury villas.
Why to invest in Spanish luxury properties
Marbella has held its position as a fantastic location for investment and its attraction doesn’t appear to be abating. The area has seen an increase in demand for luxury homes, with a boom in sales of luxury properties and a real estate appreciation rate of above average levels for the past ten years – and this is a period that included a global pandemic.
How can this be explained? Well, partly by the idea that property is seen as a safe haven in times of uncertainty – with the sentiment that bricks and mortar are a more secure investment than trusting in the volatility of financial and commodity markets such as precious metals etc.
Another important reason for this growth in demand is our changing lifestyles after the pandemic. Following long periods at home, consumers began to reassess what they required in their dwelling – quality of build and materials become more important, while the huge trend for indoor/ outdoor living, with large private outdoor spaces such as wide terraces with wonderful views, or a solarium with an outdoor kitchen to enjoy the natural surroundings, graduating to the top of the list of buyers’ desires.
It is not just the property wish list that has changed – consumers’ day-to-day lives have changed along with relatively new social and lifestyle trends that have firmly established themselves since the pandemic. For example, the five-day workweek has given way to more flexible work models, which is having an enormous impact on the real estate market, where priorities and therefore economic value are being rapidly reorganised. Who wants to slog into work every morning when we have proven that working from home is not only viable, but also improves our quality of life immeasurably?
Working from home? Work from the Costa del Sol!
Generally, higher economically advantaged employees have become more fluid in terms of where they work and no longer need to work close to their offices, thanks to technology that means they can work from practically anywhere in the world. So what does this mean for real estate in desirable regions such as the Costa del Sol? Great infrastructure, physical connections to motorways, airports, and digital networks, offer so-called ‘digital nomads’ the opportunity to live and work where they want, not where their office location dictates.
Not all buyers of these types of assets consider them as their primary residence; luxury apartments in Spain can be part of a well-diversified investment portfolio as a wealth management, savings, or pension planning strategy.
Sector analyses in 2020 already spoke of residential real estate as a safe investment for the coming years, and specifically, the high-end, luxury market, which tends to be more stable in uncertain times. The fact that this market has a finite supply has meant that prices have remained high, indeed, as has been seen in Marbella, prices have risen as demand outstripped supply in this niche sector.
As sought after by these buyers, an exclusive building or location is a scarce commodity that cannot be easily replaced by others, as is the case with lower and mid-tier homes. In addition, in the face of inflationary price increases, currency crises, and the variability of some types of investment, investors seem to be turning back to real assets that are thus appreciating in value due to the guarantee and security they offer investors. Another advantage of investing in this segment is that it does not require as much knowledge to make an intelligent purchase, given a little market knowledge of the area.
Investing in luxury real estate in Spain, and Marbella in particular, offers a myriad of advantages compared to other types of real estate investments. While of course, it is always advisable to seek expert advice before investing, the luxury real estate market in Spain has so far proven to be a safe haven for investors seeking stability, profitability, and a high-quality lifestyle.